CIT v. Ponni Sugars & Chemicals Ltd.

DCIT 4(1)(2), Mumbai vs. Degee Cotsyn Pvt. Ltd., Mumbai

In the result, the appeal of the revenue is dismissed

Bench: Shri Aby T. Varkey, Jm & Shri Gagan Goyal, Am आयकर अपील सं/ I.T.A. No.118/Mum/2020 (निर्धारण वर्ा / Assessment Year: 2014-15) Dcit-4(1)(2) बिधम/ M/S. Degee Cotsyn Pvt. Room No. 640, 6Th Floor, Ltd. Vs. Aayakar Bhavan, M. K. 4Th Floor, Central Buidling Road, Mumbai-400020. No.3, Master Boman Lane, Kalbadevi, Mumbai-400002. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aaccd4304P (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: None Revenue By: Smt. Mahita Nair (Sr. Ar) सुनवाई की तारीख / Date Of Hearing: 14/11/2022 घोषणा की तारीख /Date Of Pronouncement: 06/12/2022 आदेश / O R D E R Per Aby T. Varkey, Jm: This Is An Appeal Preferred By The Revenue Against The Order Of The Ld. Commissioner Of Income Tax (Appeals)-09, Mumbai Dated 04.10.2019 For Assessment Year 2014-15. 2. None Appeared For The Assessee. The Sole Issue Is Regarding The Action Of The Ld. Cit(A) Deleting The Addition Made By The Ao To The Tune Of Rs.5,58,52,480/- Which Assessee Claimed To Be Incentive In Nature Of Capital [Mega Project Incentive In The Form Of Sales Tax Incentive Etc.)] Whereas According To The Ao It Was Revenue In Nature. Therefore, Deduction Claimed By Assessee Was Not Allowed By The Ao. & Thereafter He Also Made Adjustment Of Book Profit Made By The Ao U/S 115Jb Of The Income Tax Act, 1961 (Hereinafter “The Act”) & Disallowed The Same & Thus Assessed The Book Profit At 2 A.Y. 2014-15 Degee Cotsyn Pvt. Ltd. Rs.2,06,95,298/-. Against The Action Of The Ao, The Assessee Preferred An Appeal Before The Ld. Cit(A) Who Was Pleased To Delete The Same. Aggrieved, By The Aforesaid Action Of The Ld. Cit(A), The Revenue Is Before Us.

…halkar Brothers, order dated 8th June, 2011 has opined that the object of the subsidy was to promote construction of multiplex theatre complexes. Such receipt of subsidy was held on “capital account”. In this decision, the decision of Ponni Sugars & Chemicals 306 ITR 392 (SC) and the decision of Sahney Steel and Press Works Ltd. 228 ITR 253 (SC) has been discussed. It was opined that the test is that the character of the receipt in the 7 A.Y. 2014-15 Degee Cotsyn Pvt. Ltd. hands of the assessee has to be determined with respect to the purpose for which the subsidy was granted. Likewise, in the case of CIT v/s. Ki…

DCIT Central Circle -2(2), Maharashtra vs. M/S. Vinati Organics Ltd, Mumbai

In the result, the appeal of the revenue vide

Bench: Shri Amit Shukla & Shri Amarjit Singhdeputy Commissioner Of Vs. M/S Vinati Organics Ltd Income Tax, Cc, 2(2) 1102, Parinee Crescezo, Old Cgo Building, G, Block, Plot No. 806, 8Th Floor, M.K. Road C38/39, Behind Mca, Mumbai – 400020 Bandra Kurla Complex, Bandra East Mumbai – 400 051 स्थायी लेखा सं./जीआइआर सं./ Pan/Gir No: Aaacv6538K Respondent .. Appellant M/S Vinati Organics Ltd Vs. Acit, Cc-2(2) 11Th Floor, 1102, Parinee Crescezo, G, Block, Plot No. C38/39, Behind Mca, Bandra Kurla Complex, Bandra East Mumbai – 400 051 स्थायी लेखा सं./जीआइआर सं./ Pan/Gir No: Aaacv6538K Appellant .. Respondent

…is incentive receipt in the form of sales tax subsidy is in some way connected to capital receipt in the form of technology upgradation and expansion of capacity of the plant. The Hon'ble Supreme Court in the case of CIT vs Ponni Sugars & Chemicals Ltd (2008) 306 ITR 392 (SC) has examined this issue in great detail and held that if the purpose of incentive or subsidy was to enable the assessee to set up a new unit or to expand the existing unit then the receipt of the subsidy was of capital in nature. For clarity the relevant portion of the decision is reproduced as under: “15. In the decision of House of Lords i…

M/S. Vinati Organics Ltd, Mumbai vs. ACIT CC 2(2), Mumbai

In the result, the appeal of the revenue vide

Bench: Shri Amit Shukla & Shri Amarjit Singhdeputy Commissioner Of Vs. M/S Vinati Organics Ltd Income Tax, Cc, 2(2) 1102, Parinee Crescezo, Old Cgo Building, G, Block, Plot No. 806, 8Th Floor, M.K. Road C38/39, Behind Mca, Mumbai – 400020 Bandra Kurla Complex, Bandra East Mumbai – 400 051 स्थायी लेखा सं./जीआइआर सं./ Pan/Gir No: Aaacv6538K Respondent .. Appellant M/S Vinati Organics Ltd Vs. Acit, Cc-2(2) 11Th Floor, 1102, Parinee Crescezo, G, Block, Plot No. C38/39, Behind Mca, Bandra Kurla Complex, Bandra East Mumbai – 400 051 स्थायी लेखा सं./जीआइआर सं./ Pan/Gir No: Aaacv6538K Appellant .. Respondent

…is incentive receipt in the form of sales tax subsidy is in some way connected to capital receipt in the form of technology upgradation and expansion of capacity of the plant. The Hon'ble Supreme Court in the case of CIT vs Ponni Sugars & Chemicals Ltd (2008) 306 ITR 392 (SC) has examined this issue in great detail and held that if the purpose of incentive or subsidy was to enable the assessee to set up a new unit or to expand the existing unit then the receipt of the subsidy was of capital in nature. For clarity the relevant portion of the decision is reproduced as under: “15. In the decision of House of Lords i…

Everest Industries Ltd., Noida vs. Dy CIT Circle- 1, Thane

In the results, appeal filed by assessee is allowed

Bench: Shri Vikas Awasthy & Shri Gagan Goyalm/S Everest Industries Ltd. 2303, Fairfield-A, Majhiwada Bridge, Thane (West)-400601 Pan: Aaace7550N ...... Appellant Vs. Dcit, Circle-1 Ashar I.T. Park, 6Th Floor, B-Wing, 16-Z, Wagle Industrial Estate, Thane (West)-400604. ..... Respondent

…in nature rather the purpose of the incentive scheme shall be seen. The said view 10 ITA No. 716, 1419 & 1420/Mum/2020-Everest Industries Ltd. finds support from the decision of the Apex Court in the case of CIT- vs. - Ponni Sugars & Chemicals Ltd. (2008) 306 ITR 392(SC) wherein it was held that:- "The importance of the judgement of this Court in Sahney Steel case lies in the fact that it has discussed and analysed the entire case law and it has laid down the basic test to be applied in judging the character of a subsidy. That test is that the character of the receipt in the hands of the assessee has to be de…

DCIT-Ltu - 2, Mumbai vs. Ambuja Cements Ltd, Mumbai

In the result, the appeal of the revenue is dismissed

…and examined is the purpose for which the subsidy has been given, and not the timing of the subsidy or the manner in which it has been given to the industry‟, as is also held by Hon‟ble Supreme Court in the case of CIT Vs Ponni Sugar and Chemicals Ltd [(2008) 306 ITR 392 (SC)]. A large number of judicial precedents have been cited in this context. Learned CIT(A) has then held that so far as the object and purpose for which the subsidy is given, only the subsidy schemes of the Maharashtra and Punjab State specifically state that the subsidies in question are for achieving dispersal of industries outside Mumbai, to…

Mahindra & Mahindra Ltd, Mumbai vs. ACIT RG 2(2)(2), Mumbai

In the result, appeal by the assessee is partly allowed for statistical purpose

Bench: Shri Pramod Kumar & Shri Sandeep Singh Karhail

…dinate Bench of Delhi Tribunal in the case of LG Electronics India Pvt. Ltd., in ITA No.2163/Del/2015 dated 19/04/2017 wherein by placing reliance on the decision of the Hon‘ble Supreme Court in the case of CIT vs. Ponni Sugars and Chemicals Ltd., reported in 306 ITR 392 had held that Industrial Promotion Subsidy received under Maharashtra 2001 package scheme of incentives to be capital receipt. The copy of the said Delhi Tribunal decision was placed on record by drawing specific reference to paras 4-7 thereof by the ld. AR. We are in agreement with the argument advanced by the ld. AR herein that the purpose for…

DCIT (Ltu) 1, Mumbai vs. Ambuja Cements Ltd, Mumbai

In the result, the appeal of the revenue is thus dismissed

…and examined is the purpose for which the subsidy has been given, and not the timing of the subsidy or the manner in which it has been given to the industry‟, as is also held by Hon‟ble Supreme Court in the case of CIT Vs Ponni Sugar and Chemicals Ltd [(2008) 306 ITR 392 (SC)]. A large number of judicial precedents have been cited in this context. Learned CIT(A) has then held that so far as the object and purpose for which the subsidy is given, only the subsidy schemes of the Maharashtra and Punjab State specifically state that the subsidies in question are for achieving dispersal of industries outside Mumbai, to…

Asst CIT Ltu, Mumbai vs. Ambuja Cements Ltd, Mumbai

In the result, the appeal of the revenue is dismissed

…view of the fact that, industry was highly capital intensive. The Revenue argued that, the subsidy was revenue in nature. This Court after referring to several decisions of the Supreme Court including the case of CIT v. Ponni Sugars and Chemicals Ltd. [2008] 306 ITR 392/174 Taxman 87 and Sahney Steel and Press Works Ltd. v. CIT [1997] 94 Taxman 368/228 ITR 253 (SC) held that, subsidy had not been granted for construction but only after setting up of a new industry which was in the nature of assistance given for the purpose of carrying on business. 7. On further appeal by the Revenue, Supreme Court confirmed the…

Ambuja Cements Ltd ( Formerly Known As Gujarat Ambuja Cements Ltd), Mumbai vs. Addl CIT 3(1), Mumbai

In the result, the appeal of the revenue is thus dismissed

…and examined is the purpose for which the subsidy has been given, and not the timing of the subsidy or the manner in which it has been given to the industry‟, as is also held by Hon‟ble Supreme Court in the case of CIT Vs Ponni Sugar and Chemicals Ltd [(2008) 306 ITR 392 (SC)]. A large number of judicial precedents have been cited in this context. Learned CIT(A) has then held that so far as the object and purpose for which the subsidy is given, only the subsidy schemes of the Maharashtra and Punjab State specifically state that the subsidies in question are for achieving dispersal of industries outside Mumbai, to…

Gabriel India Limited, 29Th Milestone vs. The Deputy Commissioner of Income Tax, Circle 5(1)(1), Mumbai

In the result, appeal of the assessee is allowed

Bench: Shri.Ri Om Prakashri. Kant & Shri Sandeep Singh Karhailआ.अ.सं.185/मुं/2022 िन.व.2014-15

…sessee would have reduced the same out of the written down value (WDV) of the block of assets as required under section 43(1) of the Act. On appeal, the Ld.CIT(A), following the findings of the Hon’ble Supreme Court in the case of Ponni Sugars & Chemicals Ltd 306 ITR 392 (SC) and Sahney Steel & Press Works vs Commissioner of Income Tax 228 ITR 253 (SC) upheld the findings of the Assessing Officer by observing as under:- 4.4.10 However, in the case of the present appellant, the Industrial Promotion Subsidy was linked to the investment in the fixed capital. The appellant is free to utilize the subsidy wherever it w…

Addl CIT 3(1), Mumbai vs. Ambuja Cements Ltd ( Formerly Gujarat Ambuja Cements Ltd), Mumbai

In the result, the appeal of the revenue is dismissed

…and examined is the purpose for which the subsidy has been given, and not the timing of the subsidy or the manner in which it has been given to the industry’, as is also held by Hon’ble Supreme Court in the case of CIT Vs Ponni Sugar and Chemicals Ltd [(2008) 306 ITR 392 (SC)]. A large number of judicial precedents have been cited in this context. Learned CIT(A) has then held that so far as the object and purpose for which the subsidy is given, only the subsidy schemes of the Maharashtra and Punjab State specifically state that the subsidies in question are for achieving dispersal of industries outside Mumbai, to…

Ambuja Cements Ltd ( Formelry Known As Gujarat Ambuja Cements Ltd), Mumbai vs. Addl CIT RG 3(1), Mumbai

In the result, the appeal of the revenue is dismissed

…and examined is the purpose for which the subsidy has been given, and not the timing of the subsidy or the manner in which it has been given to the industry’, as is also held by Hon’ble Supreme Court in the case of CIT Vs Ponni Sugar and Chemicals Ltd [(2008) 306 ITR 392 (SC)]. A large number of judicial precedents have been cited in this context. Learned CIT(A) has then held that so far as the object and purpose for which the subsidy is given, only the subsidy schemes of the Maharashtra and Punjab State specifically state that the subsidies in question are for achieving dispersal of industries outside Mumbai, to…